According to the morning report by the Australian Bureau of Statistics, the unemployment rate in July dropped to 3.4% (versus the forecast of 3.5% and the reading of 3.5% recorded in June). This is definitely a strong report. Yet, it failed to provide support to the Australian dollar as it continues to lose ground against its American counterpart. The data from the labor market that did not meet the forecast negatively affected the Australian currency. According to it, the employment rate in Australia declined in July by -40.9K although analysts predicted a rise of +25.0K following the growth of +88.4K in June.

On Wednesday, the minutes of the RBA were published. They indicate that the bank officials are determined to stabilize monetary conditions in the coming months although they have slightly gone off the planned path.

Members of the RBA Board of Directors also noted that inflation will peak in 2022 and then it will decline to the upper boundary of the target range of 2-3% by the end of 2024. The officials also noted the downward risks for the global economic perspectives. The main area of uncertainty still lies in household spending.

Analysts describe the minutes as mostly dovish. After today's release of the employment data, many traders price in the likelihood that the RBA will cut the rate by 25 basis points in September. In a different scenario, the regulator may put the process on halt and won't raise the rate as was earlier expected.

At the same time, the Fed is determined to raise the rate at a fast pace which may threaten the global economy. Consequently, tight monetary policy and the economic slowdown will affect commodity currencies, including the Australian dollar.

As long as the US Federal Reserve keeps raising the rate and the Reserve Bank of Australia maintains a more moderate approach towards monetary policy, AUD/USD is likely to extend its decline. At the moment of writing, the pair was trading near the level of 0.6927, deep in the bear market below the key resistance levels of 0.7130 and 0.7280. The pair is likely to fall further (read more here AUD/USD technical analysis and trading tips on August 18, 2022).

The next key macroeconomic data in Australia will be published only in late August. Therefore, the trajectory of the AUD/USD pair will be mainly determined by the dynamic of the US dollar. In the meantime, the greenback has strengthened today while the US dollar index has been appreciating for the fifth day in a row. At the moment of writing, DXY futures are trading near the local resistance of 107.00. Its breakout will return DXY to the ascending channel on the daily chart. The upper boundary of the channel is passing just above the 110.00 mark. If the quote breaks through the local multi-month high of 109.14, reached in mid-July, the level of 110.00 will become the next upward target.

Read more about how to trade AUD/USD in the article AUD/USD: main features and trading tips